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Porter five forces of luxury cars market in china

Pure local entry is very unlikely expected since there are already a lot of firms in the luxury-car market and because it is improbable that local governments will again heavily subsidize new entrants because the central government has been discouraging this type of investment.

On the other hand makes the continuing growing demand of luxury cars the Chinese market very attractive for local and global luxury-automobile manufacturers. Since existing luxury car brands already have brand equity, brand identification and customer loyalty in the Chinese market it is hard for new entrants to survive in this market. No protection of intellectual property rights in China is a big problem. Weak intellectual property laws allow for massive copying, which is faster, easier, and cheaper than research and development and genuine innovation The threat of new entrants is considered to be very low and therefore favorable if there is already a Chinese luxury car brand existing.

Porter five forces of luxury cars market in china

No threat cause all other brands already launched into the market The passenger car industry was delicensed in 1993. So no industrial licence is required for setting up of any unit for manufacture of automobiles. Growth of these substitutes can reduce demand for cars and consequently impose price pressures and limit profit margins for automobiles.

Porters Five Forces: High-End Premium Industry in China Essay

Substitutes for cars in general are bicycles, motor cycles, taxis and Public Transports, like trains, busses and airplanes. Given that luxury and premium cars are not only means of transportation but also a symbol of economic and social status all the above mentioned substitutes should not be a threat to the demand for the luxury car industry in China.

  • Now we will take a look at the automotive industry through michael porters five forces analysis us auto industry market essay examples - the u s auto industry's share of the market has experienced fluctuations over the business auto industry cars] 861 words 25 pages strong essays;
  • Weak intellectual property laws allow for massive copying, which is faster, easier, and cheaper than research and development and genuine innovation The threat of new entrants is considered to be very low and therefore favorable if there is already a Chinese luxury car brand existing;
  • PROOF [ 16 ].

The only realistic substitute is therefore a second hand luxury car. Also renting and leasing!!! The threat of substitutes is considered to be very low and therefore favorable. These individual consumers do not have any bargaining power against the automobile producers since they simply take the market price as given and make their individual decision on purchasing.

Especially luxury car producers do not only compete on price but rather on image, exclusiveness, environmental-friendliness etc. Consumers can easily switch between brands. That is why brand equity plays an important rule.

  • Porter s generic strategies car industry essays and research papers porter five forces prepared by dean content 1 he market in this section take a closer look at the main structural features of china's automobile industry for luxury and premium cars;
  • Despite rivalry and competition the Chinese high-end car market is highly favorable.

The bargaining power of buyers is low and therefore favorable. This is done in order to capture profits from the market. Once we focus on automobiles, the suppliers are producers of raw materials as well as of auto parts and components such as seats, air conditioners, exhaust systems, wheels, automobile glass, car braking system, airbags, seatbelts etc. Since there are a lot very small local parts and components suppliers in China they do not have bargaining power with automakers.

Also the fact, that only a few large automakers, especially in the high-end class, dominate the Chinese market intensifies the automobile suppliers dependency on the carmakers as a client. In addition to that many large automakers have their own subsidiary component plants in order to maintain long-term relationships with the supplies and to ensure component quality.

This vertical integration structure further weakens the bargaining power of local parts and components suppliers. Automakers also purchase some raw materials, like plastic, mental and steel, directly from the market mainly imported from overseas.

Imports and the prices of these products are affected by world demand and supply. The price of the major input steal has a sharp and immediate impact on the product price.

Furthermore are auto parts and components for the high-end-market mainly importer foreignly. Despite the high bargaining power of producers of raw materials the bargaining power of all the other producers is considered to be low.

Hence the intense rivalry in the Chinese market is comparable to all the other car-producing nations such as US, Germany, Italy, France, India and Japan. The price competition within the auto manufacturers is increasingly high. The Chinese high-end auto market is considered to be increasingly competitive and is therefore unfavorable. Despite rivalry and competition the Chinese high-end car market is highly favorable.

  1. WHEN [ 10 ]. Porter five forces analysis is a framework for industry analysis and business strategy development formed by michael e porter luxury car companies must take market share away from one another.
  2. So no industrial licence is required for setting up of any unit for manufacture of automobiles. Large fixed investments in machinery, equipment, land, factories, fabrication and testing of prototypes before formal production [ 2 ].
  3. The price of the major input steal has a sharp and immediate impact on the product price. The Chinese high-end auto market is considered to be increasingly competitive and is therefore unfavorable.

Since the rivalry and competition in this market is worldwide equal and therefore not more favorable somewhere else. This industry is and probably will be in the near future therefore highly favorable.

Porter five forces of luxury cars market in china

Even though Porter did not list the Government as a discrete force it has nevertheless a huge impact on all the other forces and on the industry itself.

The governments influence on the high-end automobile industry is therefore analyzed later in the report. Large fixed investments in machinery, equipment, land, factories, fabrication and testing of prototypes before formal production [ 2 ]. Economies of scale exist when the average production cost decreases as output increases [ 3 ].

  • Porter five forces of luxury cars market in china China's textile and apparel industry and the global market;
  • Porter s generic strategies car industry essays and research papers porter five forces prepared by dean content 1 he market in this section take a closer look at the main structural features of china's automobile industry for luxury and premium cars;
  • Are there also chinese luxury car brands?
  • No threat cause all other brands already launched into the market The passenger car industry was delicensed in 1993;
  • Porter's 5 forces of auto industry most homes will own at least one automobile causing them to become considered a commodity rather than a luxury item volkswagen donates 190 cars to us vw recall in china best buy case study archives may 2013 april 2013 march 2013;
  • Even though Porter did not list the Government as a discrete force it has nevertheless a huge impact on all the other forces and on the industry itself.

Economies of scope exist when the average cost decreases as more product varieties are produced [ 4 ]. Which ones and how many??? Are there also chinese luxury car brands? If not there will be probably soon because of the high and growing demand [ 5 ]. Where is that said and why is it like this?

  1. All of this needs to be proofed!!
  2. Hence the intense rivalry in the Chinese market is comparable to all the other car-producing nations such as US, Germany, Italy, France, India and Japan. The five forces model is a tool developed by michael porter of harvard business school in 1979 that is often used by businesses during the strategic planning process, along with the swot strengths.
  3. Are there also chinese luxury car brands? The threat of substitutes is considered to be very low and therefore favorable.
  4. Economies of scale exist when the average production cost decreases as output increases [ 3 ].

Are there still global manufacturers who did not launched in the Chinese market yet? All of this needs to be proofed!! WHEN [ 10 ]. Join Ventures [ 11 ]. Is trade protection still high in China??? Chinese customers would maybe prefer to purchase luxury cars from local brands than from west Europe or the US [ 13 ].

PROOF [ 16 ].